“How many cars do I need for my fleet?” That’s question heard from a rail shipper. While every situation seems unique, you can build a simple rail car calculator model that will give a good approximation of your rolling stock needs.
The Tool of the Trade – The Rail Car
In starting this process let’s begin with the rail car. What are you shipping? What car type do you plan to use? What is the car’s capacity? Our example will use LPG as the commodity and a 30,000-gallon pressurized tank car to carry it.
§ What commodity is being shipped?
§ What car type is needed?
§ What is the car capacity?
The model we’re building addresses the questions facing many logistics specialists.
What volume of product needs to be moved and at what rate?
Industrial plants generate and/or consume commodities at known rates — thousands of gallons, cubic feet, or tons of material. AltaGas Ltd.’s rail-supplied 40,000 b/d Ridley Island Propane Export Terminal (RIPET) serves as a good example. The terminal capacity is rated at 40,000 bbl./day. The average LPG tank car has a capacity of 30,000 gallons or 714 barrels. The terminal needs, on average, 56 loaded tank cars each day. The cars are delivered to RIPET’s 60-car rail rack. So, it can take all of those cars in one shot.
If the rack were smaller, it would have to be switched more than once a day to deliver the rated amount of propane. The extra handling can add more time to the unloading or loading process. If cars are not delivered at the expected rate, the plant will fall behind. An additional variable is needed to account for the real possibility that cars won’t be switched on time. You may need 10% or 25% more cars. How many depends on your circumstance and experience.
§ What is the plant’s output or input volumes
§ What is the available loading and unloading capacity?
§ How long will it take to load/unload a car?
§ How many times will the plant need to be switched to deliver or take away the volume? (Fewer loading/unloading spots mean the plant may need to be switched more than once. That could slow rail cars.
AltaGas’ exports propane all year. What if your traffic is seasonal?
A terminal with a two-car unloading rack could receive 60,000 gals/day of propane.
How do you build a fleet to handle those swings?
Unfortunately, there are few low-pain options. Many shippers lease enough cars to cover their high demand. One reason is that leasing firms rarely are willing to lease cars on demand for short periods. Or the cost is generally high. Leasing firms prefer multi-year leases of five- to seven years. That means you might have to hold a lease on a car in months when it’s rarely needed. And that means the car may have to be placed in storage — an expensive option. Some fleet managers try to sublease extra cars in slack times.
So, how many cars do you need? It depends on the answer to the next question . . .
How long does it take a car to make a round trip?
Round-trip time is a function of where the cars are going. The longer the trip and/or the more different railroads handle the car, the more time it takes for a car to cycle. As a rule of thumb, fleet managers estimate it will take a month for a manifest car to make a full turn. (If you are shipping freight in unit-train quantities — you face a different set of parameters and build a slightly different model. We’ll cover that in a future post.)
Why a month? Because a rail car goes through many steps.
In most cases, local switch trains pick up loaded cars from the shipper. That train takes the cars to a switching yard where they wait for the next train heading in the customer’s direction. Some trains only run once a day or once every couple of days. If the car is routed on different railroads (interchanged) after being delivered by the originating carrier, it may wait on the new railroad for a train heading in the right direction. Factor in one to two days per interchange. Once it arrives in the consignee’s area, it likely will be delivered by another local switch job. Finally, factor in the time needed to stage the car for unloading or loading. Larger industrial customers may have sorting yards that hold cars waiting to be unloaded or loaded. Railroads give customers 24 hours to unload or load a railroad-owned car. Customers may have longer to load or unload a private-owned car.
The car goes through the same steps, in reverse, as it completes the round trip.
Here are a few rules of thumb:
1. Count on seven to 10 days for the car to transit from the loading point to destination. (The further the distance and the greater the number of railroad-to-railroad interchanges the longer the time.)
2. Two to three days to unload the car. This accounts for the time the car is received, staged, placed at the unloading spot, and then set out for pickup for the return journey. A shipper/consignee handling manifest cars daily, usually has a nearby storage yard with a 48- to 72-hour supply of cars.
3. Count on another seven to 10 days for the return trip.
4. Factor in two to three days to load the car.
5. If the car is interchanged, tack on another day or two per interchange, each way.
Using the longest estimated times (assuming no interchanges) above suggests a car will cycle in 26 days. That assumes the journey is typical. However, rail cars move in an open system. They can get lost or delayed. Fleet owners should plan for the atypical journey to be more regular than one would expect. Trains are often slowed by winter weather. Heavy volumes of other commodities can cause congestion and slow traffic.
If the product is sourced from, or shipped to, multiple locations a calculation can be done for each load/unload pairing.
Key questions to ask the railroad:
§ What route will the car take?
§ On what railroads?
§ How many interchanges will be required?
§ What days do the serving railroads operate? (Some short lines do not operate
seven days a week.)
§ How long should the journey take?
Flat wheels, worn brakes, old cars = maintenance needs
An out-of-service car is not earning revenue and cars are still needed to carry the volume. While rail cars are built to last 50 years, they have maintenance needs. Sending a car to a shop can keep it out of service for three months or more.
How to account for that? Some shippers lease an additional 10% of cars.
Putting it all together – a sample spreadsheet:
CLIFTON LINTON, Senior Consultant
Clifton Linton is Sr. PLG Consultant and a 30-year veteran business journalist. In 2016, he founded Energy Transport Insider, an analytics firm that tracks rail car leasing rates.
For 20 years PLG’s team of experts has been providing logistics, design, operations, and strategy consulting for a wide range of clients. We have the most experienced team in the field of freight shipper consulting with the widest breadth and know-how covering all aspects of truck, container, ship, rail, and barge transportation. Our services include network optimization, commercial negotiations, operations, engineering and design, technology, site selection, fleet sizing, and economics.